After losing their respective carriers and being declared “dead” by one consultant’s study, two southern Mississippi airports have joined forces and secured shared service with the help of a new consultant and an essential air service contract.

Strategy: Market the combined passenger potential of 2 nearby communities when appealing to carriers for new service

In early November, Meridian Regional Airport (MEI) and Hattiesburg-Laurel Regional Airport (PIB) both celebrated the beginning of new service to Dallas/Fort Worth International (DFW) on ExpressJet, operating under Skywest for American Airlines. After picking up passengers at PIB, 50-seat regional jets continue to MEI, just 60 miles north, to pick up additional passengers before heading to DFW.

“Do you know how much fun it was to announce we had jet service with American?” asks Tom Williams, president and chief executive officer of the Meridian Airport Authority.

Pride notwithstanding, Williams stresses that he doesn’t take the new service for granted and MEI will do everything it can to ensure its success. To help seal the deal, the airport is taking counter and ground handling services into its own hands to support the new flights.

Similar Service Struggles

Williams explains that when he started at MEI in 1986, the airport served about 30,000 passengers per year on three airlines. American Airlines was the first to leave MEI, after closing its Nashville hub in 1990. Then Northwest Airlines ended service in 2002, leaving only Atlantic Southeast Airlines, code-sharing with Delta Air Lines, until October 2012.

When jet fuel prices climbed above $3 per gallon, Delta announced it could no longer serve the market profitably — despite good passenger loads, notes Williams. Being an essential air service carrier, the airline gave its withdrawal notice, and then rebid for the service with a subsidy for the 2008-2010 contract and again for the 2010-2012 term. Williams says he was surprised, though, when Delta did not bid for the next two-year term.

Instead, MEI received a single bid from Silver Airways, for service to Hartsfield-Jackson Atlanta International (ATL) on 34-seat Saab 340s. And the airline had “trouble after trouble” that inhibited its ability to be successful at MEI, Williams notes. For example, Silver expected a code-share arrangement with Delta that never occurred; and the airline was initially not listed on any reservations sites, so travelers had to book their ATL flights and then purchase separate tickets to MEI. Additionally, half of MEI’s traffic is military, but the airline was unable to secure Department of Defense approval to carry military personnel.

“Once you got on the airplane, then it was great — good airplane, great on-board customer service,” recalls Williams. “But they left a lot to be desired on the (ground-based) ends of the customer service side.”

Silver Airways’ last flight at MEI was Nov. 5, 2014 — the very day after the airport’s new service with American began.

PIB has a similar history, notes Executive Director Tom Heanue. Shortly after Delta Air Lines merged with Northwest Airlines, Delta discontinued its flights between PIB and Memphis International.

After Silver Airways obtained the essential air service contract for PIB, business was initially good but began to falter about eight months later. Passenger volume fell from between 900 and 1,200 per month to a “dismal” 250, reports Heanue. “With EAS (essential air service), there are a lot of hoops to jump,” he reflects. “We were barely jumping one and stumbling badly over the others.”

Neighbors Turned Partners

While experiencing similar struggles, PIB and MEI hired the same firm under separate agreements to assist with air service development. Sixel Consulting Group promptly advised Williams and Heanue to “get in a lifeboat together.”

Mike Mooney, Sixel’s executive director of Air Service Strategy and Development, explains that it was natural to pair the airports to entice a more sizable carrier, because the airports are close geographically and have similar markets and boardings. Combining the two cities allowed the airports to present a more appealing market to the airline — one capable of supporting regional jet service, Mooney explains.

PIB and MEI then developed joint and individual presentation materials, and visited airlines together. They also hit the streets in their respective communities with data to create excitement about growing air service through a partnership.

“Together, we had enough horsepower to get [Skywest] interested,” Williams relates. “Together, we’re going to make this work.”

Other consultants gave the airports nothing but doom and gloom, Heanue recalls. “But with Sixel, there was hope.”

Had the two airports not worked together, Williams believes neither would have been able to attract Skywest to its market.

“Without putting two communities together, I don’t think we would have gotten the quality of the bid in service that we’ve got,” Heanue agrees. “We would have something, but I don’t think it would have been something that has the opportunity. That’s the key to this one: the opportunity to grow; the opportunity to succeed.”

Ultimately, Heanue would like to see both airports become self-sustaining, without the need for essential air service subsidy. Their current partnership affords both the opportunity to realize that dream, he says.

“In my opinion, they don’t even belong in the EAS program,” Mooney says. “They’re both vibrant, significant communities. Hattiesburg-Laurel and Meridian were an easy sell for me. We just had to package them correctly and get the concept in front of the right people.”

He further predicts that if MEI and PIB maintain their current momentum, they will probably outgrow the need for an essential air service agreement.

“In today’s world, communities need to be regionally minded,” Heanue adds. “A lot of times we can’t attract businesses or airlines … conventionally. We need to come up with a coalition and make it feasible for a carrier to come in and bring service to the area.”

In November, Skywest was providing two weekday flights and one weekend flight, all to DFW. According to Williams, American’s willingness to be “aggressive on pricing” will help MEI grow its passenger numbers.

MEI’s catchment area is a 12-county region with 300,000 residents; and its closest major competitor is Jackson-Medgar Wiley Evers International Airport, about 90 miles away. There, travelers can access flights to six cities on American, Delta and United Airlines. To MEI’s benefit, Southwest Airlines left the airport, allowing MEI to be “pretty competitive with Jackson,” says Williams.

PIB’s catchment area includes about 130,000 people, but it secures business from just 10% to 12% of that population, reports Heanue. The rest go to airports in Gulfport, Jackson and New Orleans — all within a couple hours drive of PIB, he notes.

Heanue contends that most local residents want to support PIB, but higher ticket prices and/or unreliable service inspire them to head down the interstate to other airports.

All In

Williams considers MEI’s new flights with American the “last chance to keep air service in the community” and feels officials have to do everything in their power to make it work. “Customer service at the counter is a big piece of that in our mind,” he specifies.

Williams recalls Silver experiencing some sort of “operational meltdown” during its final days at the airport. At the peak of Silver’s struggles, the airline cancelled 43% of MEI’s flights in one month alone. “Whatever the meltdown was, it lasted about two months and just devastated the community’s confidence in the carrier,” Williams recalls. “And as an airport, you can’t speak up for an airline that does that. When is it going to happen again?”

He cites the airline’s practice of staffing its ticket counter for only two hours at flight time as a major service problem.

According to Williams, if passengers are not treated well, they simply don’t return to an airport. And he cites his airport’s recent statistics as an example: In 2013, MEI boarded 6,981 passengers; from January through October 2014, it boarded 3,226 passengers.

No matter whose employees fail to deliver good service, the airport stands to lose, he reasons. To prevent similar service shortcomings for current and future passengers, MEI bid for and won the contract to provide customer and ground support services for its new carrier.

“We had to have excellent customer service; there’s no choice,” Williams emphasizes. “I appreciate that there are people in the business making money doing good ground handling. We just did not have a confidence level that we would get that.”

As a result, MEI now employs four full-time and eight part-time workers to fill those roles. “We saw it as a means to survival,” he explains. “When you’re that close to the edge of losing everything, you just can’t put your future in somebody else’s hands. You’ve got to take care of it yourself.”

Customer service experience was the first and foremost attribute the airport considered when hiring employees to support the new flight service, Williams notes.

Securing the Business

Williams explains that the airport elected to take a “revenue-neutral position” with its bid to provide ground handling services. Under the resulting two-year contract, MEI covers personnel and ground handling equipment costs, and American Airlines pays for employee training, ticketing equipment and technical support for MEI. “We are yet to know if we made a good deal or not,” Williams says. “If we break even, we’re real happy. But we hope we’re going to make a little bit.”

He and other airport officials reason that if MEI’s counter and ground handling personnel provide great customer services, passenger numbers will improve; and as that happens, rental car and concessions revenues will also increase.

At one time, MEI had three rental car companies, with revenues totaling $100,000 per year. Today, the airport has one rental car company with roughly $20,000 in annual revenue, and Williams says it only stayed because the airport reduced its rent and concession fees as traffic declined.

Bringing ground handling services in-house is also eliminating some costs. Security services previously provided by an outside contractor are now handled by airport employees, Williams explains. Ground handlers may also begin to perform custodial work inside the terminal building between flights. “So we’re seeing more revenue in some areas; less cost in others,” he relates. “We think bidding in a revenue-neutral way should be an overall win for us. It’s just more efficient that way.”

Because the airport has operated the field’s fixed-base operation since 2004, it already had much of the ground handling equipment needed to service regional jets. It did, however, invest $75,000 in additional equipment, including a used potable water cart, used belt loader, two new bag carts and new a valet cart. The airport’s most expensive new piece of equipment is a $50,000 deicer purchased by the FAA.

The Meridian Airport Authority also invested about $50,000 in terminal improvements to prepare for the new service. “It’s our last chance to get it right,” Williams explains. “And to the extent that any of these things can help us, we just don’t have a choice but to do everything in our power to make this work.”

Increasing enplanements will not only increase airport revenue, it will also yield more federal support in entitlement money, Williams points out. The last two years, MEI has fallen below the 10,000 passengers per year threshold, thus reducing its entitlements from $1 million to $150,000. “To the extent that customer service can make the difference, there’s $850,000 in grant money on the line; there’s more parking, rental car and vending revenue on the line. And we hope we can grow some other areas of revenue in the terminal as we develop this,” he explains.

Continuing its strategy of pulling out all the stops to support its new service, MEI contracted a public relations firm and earmarked $200,000 for marketing and advertising.

Naturally, airport officials won’t know for some time if their investments will pay dividends; but the mood is optimistic in the meantime. “So far, so good” is how Heanue characterized the new service in mid-November. In 18 flights, American Eagle service from MEI and PIB to DFW yielded the same amount of business PIB logged during the last few months of Silver flights. Monthly passenger totals on Silver ranged from 200 to 250; and PIB had already served 250 passengers during its first half-month with American.

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